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Socratic Economics IX: National Accounts | 70 comments (70 topical, editorial, 0 hidden)
Re: The mechanical view of industrial development (none / 1)
wishful thinking + advertising by US gov/business leaders

Actually as the US CA deficit was until recently larger than official financing of it, private investors must have believed as well in superior returns in the US. Otherwise the official inflows would have been accompangnied by private outflows, as it happens about since last summer, when the credit crisis became publicly aware.
This happens as well currently in the Euroarea, where private money flows largely out, while official money comes in.

I responded originally because it seemed you give the Chinese kind of a moral responsibility for the current situation in the US. Besides that the mercantilist policy has elevated hundreds of millions of Chinese out of poverty, this was an opportunity - a risky one, but still - to make large investments into the future with low interest rates and low inflation at the same time in the US. And it were not only private people who borrowed the money, but as well the gov, which obviously believes, that the future lies in a superior military. Without Chinese financing, the wars in Iraq and Afghanistan would be much more painful for the US tax payer. And to use this oppurtunity that way, was a decision made in the US, not in China.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers

by Martin (weiser.mensch(at)googlemail.com) on Sun Jun 1st, 2008 at 06:34:18 PM EST
[ Parent ]
Be careful on associating all capital flows ... (4.00 / 3)
... to commercial pursuit of long term investment opportunities ... there is also the net capital flows out of low income countries into high income countries, which is of course counter to the capital scarcity theory of how financial capital ought to flow, but makes perfect sense if you put yourself in the shoes of the wealthy in low income nations.

And of course, there are the capital flows still ongoing, even if not as great as in the earlier years of the decade, where Euro-zone based companies buy out Euro-zone assets owned by US-based companies ... that is a capital flow into the US, but rather than being based on any assessment of the long term appeal of the US as an investment proposition, is rather a legacy of past overseas investment by US firms.

On the moral responsibility of the Chinese government ... consequences for internal imperialism policies in Tibet, Inner Mongolia, Xinjiang ... that would be moral responsibility. Impact of a neo-mercantalist currency policy to export unemployment to a nation whose ruling elite seems positively eager to import unemployment ... given the vulnerability of many of those hardest hit, there's a clear moral responsibility there, but its hard to see how it can be laid at the feet of the Chinese.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Jun 2nd, 2008 at 01:31:34 AM EST
[ Parent ]
Re: Be careful on associating all capital flows .. (none / 1)
Nearly bought it, but then something came to my mind. European banks (incl. CH) have lost more than 100 bn $ recently on dubious credit based assets - and the losses are only a fraction of the investment and we speak about banks, not about hedgefunds, which were also in this business. I know even privately people who have invested in US real estate.
So there is lots of evidence that there was a lot of private money inflows into the US before summer 2007. I have strong doubts that Europeans were buying back more Eurozone assetes than Americans bought new ones.


Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers
by Martin (weiser.mensch(at)googlemail.com) on Wed Jun 4th, 2008 at 07:24:45 PM EST
[ Parent ]
And, yes, there is plenty of pandering ... (none / 1)
... to wishful thinking ... and since there's plenty of pandering to wishful thinking on both sides of the aisle, the "he said / she said" style of journalism can entirely avoid noting that its all naught but wishful thinking.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Mon Jun 2nd, 2008 at 11:54:05 AM EST
[ Parent ]

Socratic Economics IX: National Accounts | 70 comments (70 topical, 0 editorial, 0 hidden)
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